Missed maxing out my 401k contribution..

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Startinlate
Posts: 5
Joined: Sun Feb 10, 2019 11:10 pm

Missed maxing out my 401k contribution..

Post by Startinlate » Sun Feb 10, 2019 11:20 pm

First, that you so much for this website. I just bought the Boogleheads book. In 2018 I only contributed 10k into my 401k. I know I can max out the contribution at $18,500. Is there anyway to invest the remaining 8.5k tax-fee? I have a simple IRA, from a previous employer, I rolled over into a traditional IRA. I’m 48 yrs old and made 125k in 2018. Thank you in advance.

bloom2708
Posts: 5494
Joined: Wed Apr 02, 2014 2:08 pm
Location: Fargo, ND

Re: Missed maxing out my 401k contribution..

Post by bloom2708 » Mon Feb 11, 2019 1:07 pm

Your 2018 401k is closed for business as far as your 401k goes.

New contributions now go toward 2019. The pre-tax max is $19k for 2019. (Roth is the same, except most should do Pre-tax 401k + Roth IRA).

Did you fill up your 2018 Roth IRA? Your traditional IRA will likely prevent you from doing a Back Door Roth. Are you single or married? The regular Roth contribution income limits phase out at income levels for Single and Married people. Find those limits on the IRS website. If single, you could see if your 401k would accept the Traditional IRA as a roll in. That would clear you for a Back Door Roth in future years if you are over the income limits for regular Roth IRA contributions.

Divide your 2019 gross pay by your number of checks. That is the amount per pay period to contribute. Then figure out the percentage of your base pay for 1 pay period.

$19k divided by 24 pay periods = $791. $791/5,000 (example) = 16%. Set your pre-tax 401k to 16%. Account for bonus payments if you get one during the year.

Match dollars do not count toward the pre-tax 401k limit.
"A Stoic believes they don’t control the world around them, only how they respond--and that they must always respond with courage, temperance, wisdom, and justice." --Daily Stoic

lakpr
Posts: 543
Joined: Fri Mar 18, 2011 9:59 am

Re: Missed maxing out my 401k contribution..

Post by lakpr » Mon Feb 11, 2019 1:37 pm

If you are below certain income thresholds based on your tax filing status, you may be able to contribute $5500 to the traditional IRA for 2018 and deduct that contribution. But this step must be done before April 15. Those limits are $63,000 for singles, and $101,000 for Married Filing Jointly. If you are above $73000/$123000 respectively, your deductibility is completely phased out.

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